Correlation Between London Security and Planet Fitness
Can any of the company-specific risk be diversified away by investing in both London Security and Planet Fitness at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining London Security and Planet Fitness into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between London Security Plc and Planet Fitness Cl, you can compare the effects of market volatilities on London Security and Planet Fitness and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in London Security with a short position of Planet Fitness. Check out your portfolio center. Please also check ongoing floating volatility patterns of London Security and Planet Fitness.
Diversification Opportunities for London Security and Planet Fitness
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between London and Planet is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding London Security Plc and Planet Fitness Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Fitness Cl and London Security is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on London Security Plc are associated (or correlated) with Planet Fitness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Planet Fitness Cl has no effect on the direction of London Security i.e., London Security and Planet Fitness go up and down completely randomly.
Pair Corralation between London Security and Planet Fitness
Assuming the 90 days trading horizon London Security is expected to generate 1.77 times less return on investment than Planet Fitness. But when comparing it to its historical volatility, London Security Plc is 1.67 times less risky than Planet Fitness. It trades about 0.03 of its potential returns per unit of risk. Planet Fitness Cl is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 8,043 in Planet Fitness Cl on October 14, 2024 and sell it today you would earn a total of 2,125 from holding Planet Fitness Cl or generate 26.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 83.17% |
| Values | Daily Returns |
London Security Plc vs. Planet Fitness Cl
Performance |
| Timeline |
| London Security Plc |
| Planet Fitness Cl |
London Security and Planet Fitness Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with London Security and Planet Fitness
The main advantage of trading using opposite London Security and Planet Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if London Security position performs unexpectedly, Planet Fitness can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Planet Fitness will offset losses from the drop in Planet Fitness' long position.| London Security vs. Virgin Wines UK | London Security vs. URU Metals | London Security vs. Gaztransport et Technigaz | London Security vs. Vitec Software Group |
| Planet Fitness vs. Coeur Mining | Planet Fitness vs. Spirent Communications plc | Planet Fitness vs. Thor Mining PLC | Planet Fitness vs. Batm Advanced Communications |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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